CUTTING WASTE & SAVING COSTS ALONG THE MEDICAL SUPPLY CHAIN: The Impact of the IoT, RFID & WMS

Medical supply waste is a major problem, one so rampant that the FDA recently passed their own law to try to reign it in. The problem is tied expressly to the supply chain, where a lack of proper end-to-end visibility on the part of the shippers — as well as a tendency towards what can only be described as hoarding by the hospital purchasers — has led to massive amounts of medical devices going unused and unaccounted for.

Consider the numbers: the value of medical devices that go wasted annually amounts to almost $5 billion. The percentage of medical equipment and products that will expire while in storage at hospitals is roughly 7-10. Meanwhile, over 2 hours of an average nurse’s time on-shift will be devoted to searching for the products needed for a procedure, many of which will have likely passed their expiration dates by the time that they are found (if they are found at all). Forgetting for a moment the human cost (patients not receiving the quality treatment they so desperately need on time), all of this adds up to a 1% loss of potential revenue across all health systems per year.

There are several factors that, when combined, account for this culture of waste along the medical supply chain. The first is one of scattered inventory that is walked into hospitals without proper recording, so that even when the hospitals are in possession of their needed supplies, they are unable to locate them. Bulk purchasing on discounted merchandise by hospital managers, undertaken in order to protect against future stock outs, results in hospitals hoarding more products than they need. Yet, because the supply chain is so sloppy, no one knows when the equipment arrives and where it gets stored.

Standardization of accountability and purchasing is being implemented, thanks to hospitals having to comply with the FDA’s Unique Device Identification Law. Meanwhile, a move away from the consignment of high-value implantables, which were responsible for much of the inefficiency that results in these products going expired while sitting on hospital shelves, is also helping to change the wasteful status quo.

These are both good first steps, but solutions are also needed from the supply chain’s end. Luckily, there are technological advances, as well as industry best practices, that can be utilized by responsible shippers and logistics providers, in order to further cut down on this waste.

One such example is that of radio-frequency identification (RFID). This technology uses electromagnetic fields to automatically identify products by tags attached to them. Cloud-based RFID platforms are capable of providing total visibility of inventory, and allow for full electronic integration of supply chain record keeping and hospital IT systems. This automated tracking system can monitor merchandise along every part of the supply chain, from manufacturer, to shipping and receiving, to stocking, to point-of-care usage.

The new ‘smart’ supply chain database created by RFID is part of an overall move towards IoT (Internet of Things) technology. As more and more products come outfitted with spatial awareness and location intelligence, they will help health systems keep track of, and improve, their inventory levels, which in turn will optimize their aggregate spend and costs. These costs can be passed on to the patients and the quality of care they are able to provide.

It is on shippers, as much as it is on healthcare systems, to help implement this new technology. In the meantime, they can do their part to cut down on waste, and to keep track of inventory, by investing in a top-shelf warehouse management system (WMS). A solid WMS design will ensure a high level of accuracy and accounting, fast and reliable shipping, safe handling, and a minimizing of cost for products in storage. Every good shipper and service provider should have such a system in place, but it is of particular importance when it comes to servicing the healthcare industry.

Throughout its history, Aeronet Worldwide has done business with several major clients in the medical field, including equipment manufacturers. Their shipping capabilities, including their investment in leading edge eSolutions, and their decades’ worth of expertise in this field, make them uniquely qualified to handle any-and-all logistic needs when it comes to medical devices and equipment.